EP 600: Creating Value in Return Processing with Maven Circular
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And now, here's Kevin. Hey, it's Kevin with the New Warehouse Podcast here at ProMat 2025. And I have two guests joining me today. One guest that has been on previously back in December 2019. Episode 145. Episode 145. That's a long time ago, definitely. So it's Nate.

and Jess Schissler. So it's great to have you here, great to have you joining us. You guys are representing your own company, right? MFR and also Maven Circular. So tell us first, I mean, tell us a little bit about your days here and what you're experiencing on the show floor here. Yeah, I mean, ProMAT's a great event for us. I was kind of joking with Jess when we first got here, like,

as really small independent warehouse operators, we tend to stick to the perimeter of each of the exhibit halls. Okay. Yeah. You know, I used to work with the Dematics and, you know, those guys, but like we don't play in that space anymore. So it's really great to see, you know, a lot of the innovation of those like smaller companies that are building, you know, boutique products for the warehousing and supply chain market. And you definitely get a lot of like ideas, inspiration, you know,

need to see kind of like those specialty use cases and problems that are being solved by some of those companies that are like exhibiting on the perimeter of the show. Yeah. Obviously, like, can stand all day and watch, you know, the ASRS demo take place, but like, we're not going to be putting one of those in anytime soon. Sure. So, you know, we come here to really just find solutions that we can offer to our customers. Yeah.

Yeah, yeah, I think that's great, too, because there is a, you know, it's easy to get kind of mesmerized and lost by all that stuff, right? But there are these, like, in-between solutions that are doing some really creative things and addressing some really practical needs, definitely. And what about you, Jess? Have you seen anything...

Yeah. Stands out. Yeah. I mean, you know, walking around with Nate and his background is more warehousing. So he knows all the brands and all the larger companies. And I'm looking at things from a bit of a different lens and really looking at, you know, the...

how to solve XYZ problems. And a lot of what we're seeing here, of course, you know, we went last year, we were in Atlanta at Modax. Yeah. Um, it was very eyeopening for me. And then this year around, I kind of knew what we were getting into. I definitely hit my like 10,000 step, you know, my steps for the day pretty early in the day. But, um,

You know, it is really great to chit-chat with smaller companies that are, you know, really growing but hyper-focused on what they're actually selling. And we have found a couple solutions that we've considered bringing into our warehouse, which is always a bonus. And, like, you're really trying to land when you're coming to an event like this. So, yeah, meeting a lot of really cool people, selling interesting things, and...

and solving some of our own problems in warehousing as well for some of our customers. Nice, nice. Solving your own problems, solving their problems. Yes, yeah. Problem solvers are around. That's what it is. Very nice, very nice. So tell us a little bit about your business or your businesses. You've got MFR, Maven, Circular. I see you're all branded out here for the show. Love it, definitely. So tell us a little bit about it. Yeah, so MFR launched in the fall of 2022 as a services business in support of some of our consulting clients. So...

We've got Maven Circular. It's a consulting practice focused on reverse logistics, returns, and kind of specialty supply chain. And then we kept getting requests and really demand for helping brands and helping retailers find a service provider to support those specialty services. And we were leading a lot of RFPs. And really kind of coming to the end of that process, not really super excited with...

the candidates that had responded to the RFP. And one of our clients said, look, we know you guys know how to do this.

why don't you go lease a warehouse and become our operator? And that's literally how it started. Like we were, you know, we were on a sales call with them and we were driving back from Boston and like it happened on a car ride, you know, go lease a warehouse and like take over our operations. And then since then we've started just really expanding that services offering. You know, it started as something that was just like gated by our consulting practice. You had to be a consulting client to really have access to those services and

And now as we're expanding beyond just re-commerce and resale,

We're really bringing that business that while it sounds like it's very new, we've been at it for a while. We've got three locations in central Ohio and about a dozen active customers. We're bringing that business out into the forefront and talking a little more openly around our broadened service offering, focusing on upstream and downstream from re-commerce and resale. Interesting. I think it's such an interesting market. Yeah.

position to be in within the supply chain. So I guess tell us, you know, where are we at right now in regards to, you know, this whole returns, free commerce, free sales. I mean, what's really going on in the distribution ecosphere? Yeah. I think, you know, when we were reviewing the show notes for today, we

you know, re-commerce has definitely not lived up to the hype. Certainly over the last two years. Yeah, there was certainly a big demand four or five years ago and that was really driving in the industry. And in the past year and a half, two years, we've really seen it almost stabilize and not much growth in that area. So as business owners, you know, when you're looking at scaling and growing, we're like, how can we still...

customers, more customers, but in a direction that has, you know, that we're solving more problems. So we know returns is certainly one of those huge items that is a problem for a lot of brands and a lot of retailers. And when we look at the supply chain of

starting with re-commerce and resale as the service offering, and you think about what's the supply chain of a re-commerce item, the source of inventory for a re-commerce program is returns. And so we started to ask these questions like,

Okay, if resale and re-commerce isn't really going to be the kind of darling industry trend that everyone thought it was, and we can talk about why that is, but look, it's like a lack of regulation. If you compare the US to Europe, very different regulatory systems. Brands are just not incentivized to run resale programs regularly.

the way they are in other countries. And so that's a big piece of it. And also there's just a lot of like really entrenched ways of thinking about resale and off price markets that are still very prevalent in the US. So we'll just park that. But when you think about the supply chain of resale or re-commerce or any circular product,

the source of supply is returns. And so you start to ask these questions like, well, how can we prevent things from needing to go into a secondary market? And the answer in most cases is actually speed. And that's really like our thesis here, which is the reason a lot of products are ending up needing to go to an off price channel is because they're not returned to stock fast enough to

to catch that full price, to really ride the coattails of that full price selling session or selling season for that particular product. If there's a two or three or four week delay, we're working with a couple brands out of Australia right now who, and you won't believe me when I tell you this, and I didn't believe it when I learned about it. Let's hear it. Almost all Australian e-commerce brands that are shipping into the U.S. today are repatriating their returns back to Australia. Wow.

to be reprocessed, to be processed and put back into stock to then again be sold into the U.S. That sounds like a lot of waste of time. And money. Yeah. But to your point, time, like, what's another word for time? It's the cash cycle of your inventory. Yeah, definitely. How can you get that inventory back into stock faster and resell that returned item at full price? That's really the question that we're trying to solve. And the key there, yeah, the key there is how do you mitigate that markdown time? Right.

So how are you avoiding that if, you know, let's say typical brand is a markdown strategy of 16 weeks?

you have to get that product back in full price to actually make it move. Right, right, yeah. In most warehouses, the returns area is definitely deprioritized from a labor planning perspective. So you have your returns sitting at the dock for weeks, potentially, and it just all ends up being on markdown. So why would you dedicate expedited labor to work in those spaces? Yeah, yeah.

Sorry, continue. Yeah, no. And so that's really our thesis of evolving the service offering to say, we've already figured out how to do the most complex stuff in the industry, which is inspections, refurbishment, all of the re-commerce type activities. So returns processing for us is actually the easiest thing we do. And fulfillment of those returned units is even easier than that. And so...

By looking at re-commerce as actually the need for re-commerce as a symptom as opposed to a solution, we're now saying, all right, let's help you get that return to inventory back into stock faster. For some customers, we're like 48 hours dock to stock. Return hits our dock and it's back in your sellable inventory within 48 hours. And then we're acting as a secondary fulfillment node for those brands.

And we've assembled a tech stack. Like this is not like homegrown tech. We've pieced together a tech stack of companies you've heard of. I know you've talked to like Kyle and two boxes team. We work with them. We work with ship hero and we put together a couple integrations that allow us for these brands that are on Shopify and Salesforce and other, you know, like leading platforms to basically like plug into our stack and,

and just reroute returns to us, and then allow them to be refulfilled as a secondary node with no integration, no dev work on their team on behalf of their engineering team, and start to think about that return inventory is like how do we improve that cache cycle?

Yeah, absolutely. And I think that's super smart, right? Because you think about it and like you said, you know, returns is often like, like deprioritized, right? In that sense. And I've managed a returns department myself in the past. And certainly when picking was busy, they certainly came for the returns workers first. And then I was still asked like, you know, why are the returns so old? Yeah. Well, that's another story. But, um,

Um, yeah, I mean, I think that, you know, being able to do that and have that dedicated, you know, kind of resource to, to focus on that and turn it around in 48 hours, I mean, closes that gap like you were talking about to be able to take advantage of that, that selling season. Right. And I, and I imagine you see that that is very prevalent, uh,

within apparel especially, right? For sure. Because it's very seasonal. Definitely, yeah. Highly seasonal. You know, we have a background. We both worked at Lululemon for a period of time. I would say they're kind of on the extreme end of like, you know, there's not four seasons. There's 52 seasons. Like every week is a new season. Yeah. Most brands don't go to that extent. But many brands today are operating on a four to six week cycle. Right. So those returns that you start to receive after the first or second week

don't make it back into inventory to catch that full price selling window. And so, you know, another way to think about returns is like if your brand has a 20% return rate, which is pretty average for the apparel space, that means at any given time, 20% of your inventory is unsellable. Yeah. Because it's in transit or unprocessed back to you. Yeah. Mm-hmm.

So if you were a brand and I'm pitching you, like you tell me the dollar value of 20% of your inventory. That's a lot. That's

It's a lot. Yeah. It's millions of dollars for many brands. Definitely. And so getting it back, selling as quickly as possible is actually far more beneficial than offering a circular experience. Like, let's just get it back into stock as fast as possible and let you resell it. Yeah. And sell it like it's new, basically. Yeah, exactly. So now on that side for your business, right? So you're only focusing on...

processing the return and then fulfilling the returned items, right? Are you doing other fulfillment too or are you just very concentrated on that? Well, we're also doing grading. So within the process for inbound of said return, we're

If there is a customer that is looking to pivot both returns and re-commerce, we have that capability. So we have the ability to say, this is B grade, that goes to re-commerce. This is A grade, that's full price return. That will just get refulfilled. So we have the capability of grading and navigating through different tiers that might be defined by the customer.

And then we also have an exit strategy for a lot of brands. So...

like social selling is one that's like, you know, I don't know if you've heard of the whatnot, but that is definitely, yeah, a huge, big industry that's growing. It's growing and it's interesting because that's really focused on, you know, selling to resellers. So when you think about price point, there's that consideration. Okay. Yeah, we're kind of like positioning it, well, like TBD if we trademark this or not, but what we're calling it is essentially like

direct-to-consumer liquidation. So as opposed to

liquidating your unsellable product for 10 cents on the dollar and it changes hands three or four or five times between liquidation brokers, you know, companies like Ghost and HelpSea and others that are operating in the background very quietly, like buying liquidations for pennies on the dollar and then reselling them into like regional markets and like consignment shops and stuff like that. Our strategy is like, how do we help the brand get that liquidated item to

either sold to the final customer ideally or sold to that consignment shop owner and skip all of the handoffs from broker to broker to broker so instead of getting 10 cents on the dollar you're getting 30, 40, sometimes 50 cents on the dollar and

and we do that through, we're building out a social selling capability. So, I mean, literally imagine like a whatnot studio. Are we going to see you? You're not going to see me. There's no, we want to see Nate up there. There's no on air talent on the couch here. Um, but you know, we have the space and are building out a studio to facilitate that. Um,

You know, we also offer some really creative auction services. We're a licensed auction firm in the state of Ohio, which is like something I thought I would never have on my resume. That's cool, yeah. Yeah, and so we can offer some creative, like, liquidation options that still protect the brand. These transactions don't go up on the internet. They're not searchable. It's not like we're putting stuff on eBay, you know, where you're essentially competing against yourself. We're able to sell directly to that, like,

one level removed from the end customer and get the brand a lot better return on the liquidation. Interesting, interesting. Yeah, it sounds like you're able to kind of focus on it and still squeeze as much value out of that inventory as possible. That's really the goal. Yeah.

both for us and for our customers, to really drive revenue for everybody all around. And instead of, you know, at a core, we're still really against that, like, let's just exit product to landfill. Or incinerate. And incinerate, yeah. That's not who we are. That's not what we want. If a brand is very, you know, coming in strong on that's how they want to exit, we're not going to say no, but we're probably actually not in the sales cycle

going to be attracting those customers, like those brands anyways. And really, you know, when you think about re-commerce, a lot of it is to, you know, deter what's actually going to landfill to have a second or third life. And we still want to be driving that kind of outcome. And it's just, you know, how do we do that in a scalable way?

Yeah, interesting, interesting. And now, what about from, because you kind of mentioned in the beginning of the conversation that e-commerce was a huge topic five years ago, last couple of years. Maybe the conversation has died down a little bit. But what about from the consumer perspective? Like, what are you hearing that consumers are kind of demanding? Because at the end of the day, they're the ones really driving the supply chain in any shape or form, right? So what are they kind of looking for in terms of, you know, retailing?

returns or e-commerce or options around that. We'll be back after a quick break.

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Yeah, I think that generationally it's different. So younger generations are really driving re-commerce, buying secondhand, thrifting, those sort of behaviors. It's definitely more of a value for them. Okay. Where the older generations are...

that's not really the direction that they're going. They're kind of more open to buying new and returning. So, you know, e-com has really exploded from a returns perspective, probably right around when, you know, COVID started. Everyone was at home, bored. You know, and I think that there's, you know, the Amazon effect of like buying now, get everything as fast as you can, return it.

And Amazon has like Amazon warehouse and but they also sell their returns. Right. And a traditional brand doesn't have necessarily that ability. So, you know, it's unfortunate how much from an e-commerce perspective, how much you're seeing from a returns perspective.

but you're also getting that from a customer behavior. So there's almost, in my opinion, and Nate might not actually feel the same way, but I kind of feel like Amazon has really created this behavior, this normal behavior of buying a bunch of things, keeping one of them, and sending everything back.

And it's just so easy. And when you have consumers doing that same behavior with a brand, but the brand doesn't have like the back end capability to make that sustainable in any way, you know, you're getting all these returns. But then that example, like I was sharing, like it just sits at the dock for weeks and then it's not actually, you know, they're not actually making much margin on it. So, you know, sometimes they just consolidate it and ship it out to get incinerated.

And it's really unfortunate. And so we're seeing as an industry, you know, seeing that behavior.

And, you know, I'm even seeing it, you know, in different circles of my life that, you know, it's a topic that gets talked about. Like, oh, if we just buy this, we'll just return it when we're done using it. Yeah. I think a lot of people do that. And, you know, I think Evan from Two Boxes, he actually has a pretty funny, I think he does it weekly. Yeah. Ship people return. Yeah, yeah. Of course. He's got a brand there. Trademark that. Yeah.

But yeah, it's definitely a reality. So I think as a blanket statement, I feel like consumers aren't all acting the same. I think there's differences in generations. Yeah, interesting. So do you agree? Yeah, I would say I agree with all of that. To answer your question very directly, there is undeniably...

unmet demand for off price or if you just want to look like blanket statement, like off price goods, whether that's sale clearance, closeout, secondhand resale and it's various fashions. There's definitely unmet demand for sure across categories. You can look at certain like outlier brands and say like their customers really into this. Um,

you know, keen footwear being example, like the keen customer. I've made the analogy like keen is like the Patagonia of boots. They're like a feel good environmentally conscious brand. Their customers are very environmentally conscious. And so when they launched their program with essentially zero fanfare, they just put a link on their website and,

Like that program is wildly successful because their customers are craving it. Right. And you can look at viral brands like Yeti or Lululemon where there's such a strong demand for the product and people are paying such a premium for the name. Right. That there's clearly unmet demand there for off price. Those brands tend to be a little bit cagier about like acknowledging and marketing the programs, but the programs are still massively successful. I mean, look, when,

like new program launched, zero marketing, zero public awareness. Um, they put a link out there and the first 30 days did a million dollars in revenue. Oh wow. Without even acknowledging the existence of the program. Without even pushing it. Yeah. So those, those certainly exist as like,

I would say they're outliers to the broader resale secondhand market. But we see very consistently that if you make a quality product and as a brand you embrace the life of that product beyond its first sale, there are customers who want to buy it in an off-price model and they will continue to be loyal to you. And really more importantly, the data that we see, obviously we have to be very careful here because...

I've signed so many NDAs over the last five years, I'm not sure what I'm allowed to talk about anymore. But pretty reliably across our customer base, we see that if you are offering a resale program, for every two units that you sell in a secondhand model, you're acquiring one new customer.

I see. Like that to me should be like, that's it. Show's over. We're done. Yeah. Yeah. You're telling me if I can sell to use things, I get a new full price customer who's going to transact on my, I can now market to at full price. Yeah. Like what are we even talking about? Right. So there's definitely an unmet demand out there. Um,

Brands are just, at least in the U.S., are very cagey about these programs. They're still very uneasy about it. I mean, yeah, we had an episode on our podcast, Mystical Innovation, around which brands are really best suited for our e-commerce program. And if you kind of peel back the onion a little bit there, it's like high-quality brands

typically big margin. Right. Outdoor gear is like a great example. You use it a couple times and then it sits in your garage for 20 years until your grandson's like, yeah, I need a tent. Yeah. You know what I mean? So like that is an example that like a program for, you know, Solomon or, you know, mountain equipment co-op or REI, like those are definitely areas that

are greatly suited for e-commerce programs. And a lot of those, they already have the program. So they're, you know, up and running. And I think out like as you think about growing that space, it's really tough when that pressure from like, you know, regulation perspective is just not there. But even, you know, I am Canadian and coming from Canada, a lot of even the e-commerce programs aren't,

shipping to Canada, which is like incredibly frustrating because a lot of Canadians also and other countries, they want some of this product. And the U.S. obviously is like, you know, the home of a lot of, you know, these big, massive warehouses and technologies that enable the e-commerce space. So that's something that I do think there is a demand and I do think that there's like a gap.

Because there's not, you know, if the consumer wants it, but they don't have it from the brand, they're going to eBay or Marketplace or these other things. And that's really the space that the brand can be capitalizing in where it's like you're creating a new sales channel and also authenticating your product.

And then like what Nate was sharing, like you're potentially gaining 50% new customers for each of those purchases. So, you know, we're passionate about it. We definitely think that there's space for it. And I think just in today's ecosystem of...

you know, regulations and whatnot. It's just not a priority for brands, unfortunately. Yeah. Yeah. It can be complicated, challenging. Right. So, uh, so if it's complicated and challenging for them, I think I know some people that could help them. Right. So how do brands like get in, get in touch with you? How do they get started with you? Can you help them like put programs together and get this thing rolling? Yeah. So that's our Maven circular brand. Um,

So we do consulting, that's really where we started when we jumped into the space of entrepreneurship.

You know, we add a flavor that's a little different. You know, we're a married couple and we have different backgrounds that really blend well together. And basically within Maven Circular, we're building programs and we're also supporting brands that have existing programs that want to improve upon them. So when you think about optimization, when you think about

sales channel flow, inventory movement, even things like warehousing and different ways to, you know, there's always an argument in warehousing on like how many warehouses should you have when you think about, you know, how much, you know, your SKU depth is and, you know, the argument between multiple warehouses versus split orders and whatnot. So, you know, we have a lot of data around that specifically for e-commerce as well.

so we've helped many brands stand up and, and we have supported brands in terms of, you know, RFPs for second time around after being live for, you know, four or five years. And they're looking at new providers and, you know, the ecosystem within re-commerce is evolving very quickly. And, you know, who was out five years ago, you know, there's five new technology companies that have popped up since then. So. Yeah, definitely. Yeah. So I think like there's a,

There's certainly a spectrum of ways that we engage with clients. To Jess's point, there's that kind of full service offering, like help us. Okay, we can do that. We can be a fractional resource. And we often find ourselves in many cases playing that role of like fractional COO to a company or like fractional head of operations during a transition or improvement project. And then on the other end of that spectrum is like,

Just pure services engagement. Yeah. Can you take my returns and can you re-fulfill them? I'm on Shopify. And the answer is like, yes. Yeah. Sorry, just to break it down. So there's Maven Circular Consulting and then there's MFR, which is Maven Fulfillment and Recommerce. Yes, the services. Yeah. So that's the services business. And so if you're a brand that is in the kind of Shopify, Salesforce, Commerce Cloud ecosystem...

and you're using Loop or Aftership or any of those RMA providers, you can redirect returns to us tomorrow. Definitely. And we set this, you know, this really like zero integration tech stack. It's two boxes up to your RMA provider, it's Ship Hero up to your sales platform. And...

we can set up a pilot in a week. So that's like the spectrum of like how we engage with clients. Some clients just say, Hey, we have a returns problem. Can you help us? Great. We only do deals like that on the services side of the business. And so we don't get, it's a lot simpler for us to like contract a deal like that because all of our contracts only work one way and they're like cost plus only. Yeah. You know, we don't get into these like, we're not like competing, uh,

you know, with rate cards against other 3PL providers, like, oh, I'll do it for 5 cents cheaper than that guy. Like, that's not how we work. Yeah. And really, the reason why is returns and re-commerce and grading and all of that work is very hard to... Standardize. Yeah, to standardize. Right. And you can have a month of returns at our couches, and then the next month, they're all lamps, and just the time it takes to repair some of that stuff if we are doing that work.

just doesn't and it really creates a flexible environment so when you're thinking about a brand saying we want to actually change how product goes out to a consumer well then we don't have to sit there and negotiate different rates we're just going to execute the work it's an open book you know they can yeah open book arrangement they can they can visit at any point in time they can look at our books in terms of labor hours and what not um

So for us, it's really driving that trust with our customer, with our brands, which to us, integrity is definitely one of our top values for our business. I think that's fantastic, definitely. And the services you offer sound like they can really capture a lot more value based on what we talked about today. So if people are interested in getting in touch with you, seeing how they can work with you potentially, what's the best way to do that?

Yeah, we're obviously on LinkedIn. And then you can go to the website of either one of our businesses, mavencircular.com or mavenfr.com. We've got contact information out there. Yeah. We love to chat with folks who are interested in space. Definitely. And we'll definitely put all that information at thenewwarehouse.com as well as in the show notes too. So Nate and Jess, thank you so much for stopping by and joining me here at ProMap.

You've been listening to the New Warehouse Podcast with Kevin Lawton. Subscribe and check us out online at thenewwarehouse.com. Enjoyed this episode? Make sure you are subscribed to the podcast and for more content from The New Warehouse, find us on LinkedIn and YouTube. Links to subscribe can be found in the show notes and for everything The New Warehouse, head to thenewwarehouse.com.